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Opinions of Monday, 26 July 2021

Columnist: Fejiro Johnson

Boosting non-oil exports through export expansion

NEPC NEPC

Nigeria’s non-oil exports reportedly increased by 14% from N1.74bn in 2019 to N2.074bn in 2020. According to data from the Nigerian Export Promotion Council, some of the major non-oil export products include cocoa beans, sesame seeds, cashew nuts, urea, cigarettes, aluminum ingots, finished leather, soya bean meal, cocoa butter, processed frozen shrimp and crabs, among others.

Considering that crude oil generates about 90% of Nigeria’s foreign exchange earning – which has been so for decades – this data provides an interesting perspective to not only the country’s undoubted capacity to improve its foreign exchange earnings through non-oil exports, but also to improve the Nigerian economy in general.

For instance, one of the non-oil export products that generated the most revenue in 2020 is finished leather. According to a study carried out by the Nigerian Economic Summit Group, the Nigerian leather industry has the potential to increase its earnings by 70% and generate over $1bn by 2025. With the current exchange rate, that’s over N400bn from just one product.

During the formal launch and sensitisation workshop on the National Leather and Leather Products Policy Implementation Plan in Abuja, Vice President Yemi Osinbajo noted that, “Today, Nigeria’s semi-finished and finished leather have their highest patronage in Italy, Spain, India, South Asia and China. Shoes, belts, bags and folders are largely traded in West Africa and the rest of Africa.”

It goes without saying that if properly harnessed and maximised, the potential of non-oil exports to stimulating the growth of the Nigerian economy is great indeed.

This is why the Federal Government’s implementation of the N50bn Export Expansion Facility Programme, a scheme under its Economic Sustainability Plan, is one to be commended.

According to its objectives, the EEFP will focus on driving economic growth through exports.

The EEFP focuses on cushioning the effects of the COVID-19 pandemic on non-oil export businesses thereby safeguarding and creating new jobs, as well as accelerating growth of non-oil sector to effectively diversify the economy.

In the same vein, its primary goal is to increase Nigeria’s export capacity in the near term and its export volumes in the medium term, while also targeted at providing support to exporters, particularly Micro, Small and Medium Entrepreneurs.

The NEPC noted that the “EEFP strategic goal is: To provide key support mechanisms and incentives to enhance the quality of exporters that can easily penetrate the global market with competitive products that have globally acceptable certifications and meet required standards.”

In March, the Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, officially inaugurated the EEFP and launched the first online Grant Management Portal for non-oil exports. The online portal is supported by the EEFP and all applications for the Export Development Fund will be processed through the system.

The portal will be for exporters to register for grants as direct intervention from the Federal Government with the objective of providing financial assistance to exporting companies to cover part of their initial expenses with respect to export promotion activities.

The minister noted that the EEFP’s goals include “to save jobs, create jobs, support resilience in shoring up foreign exchange, diversification, modernisation of Nigeria’s economy and acceleration of economic growth and economic support.”

This definitely sounds like music to the ears of MSMEs and other stakeholders in the non-oil exports sector. But for many, the key lies in its implementation.

The EEFP is being implemented by the NEPC, while the Federal Ministry of Industry, Trade and Investment is the supervisory body over the agency and its operations.

The NEPC is the Federal Government’s apex institution for the promotion, development and diversification of exports. Its mandate includes the coordination and harmonisation of export development and promotion activities in Nigeria, taking the lead in national export programmes, and working with international trade agencies on cooperation and capacity building.

Highlighting the focus areas of the EEFP, the Executive Director/ CEO of the NEPC, Segun Awolowo, said the agency will apply the use of technology through the Grant Management Portal to “equalise opportunities to achieve inclusive economic growth through non-oil exports.”

What Awolowo was referring to is the Export Expansion Grant, which alongside the Export Development Fund, , are export incentives introduced by the Federal Government through the Export (Incentives and Miscellaneous Provisions) Act (amended in 1992) to stimulate non-oil exports. The scheme was suspended in 2014 to ensure a review and redesign in order to prevent abuse and ensure that the scheme is fit for purpose, according to a PWC document.

Many Nigerians are hopeful that with the EEFP initiative, it will indeed usher in a new frontier for the country’s economic growth through non-oil exports.

For Nigeria especially, regarded as Africa’s largest economy, this can only be good news for its drive towards boosting its non-oil exports.